The Central Bank of Nigeria on Friday publicly declared that it neither issued nor contemplated to stop commercial banks from their practice of margin lending or lending for investment in securities

The CBN Governor, Prof. Chukwuma Soludo, stated this at a Breakfast Forum for the Bankers’ Committee and financial system regulators in Lagos. On the price volatility witnessed on the Nigerian Stock Exchange in recent weeks, Soludo said market volatility was a major feature and common phenomenon in the global market system. He said this was not peculiar to the NSE alone.

He said, “We are still surprised ourselves to hear the rumours making the rounds that we stopped margin lending by banks. There was no letter issued or discussion in this regard. It was not even contemplated by the CBN. We did not know where it came from, but certainly not from us. We make bold to categorically state that there was no basis for it. The CBN will not and does not prescribe to the banks on which sector they should lend to and which sector they should not. The banks are free to lend at whatever direction their management wishes them to.”

Also speaking at the session, the Minister of State for Finance, Mr. Remi Babalola, expressed faith and optimism in the economy, saying the position of the capital market at the moment was one that should attract more foreign direct investment. He said, “We expect that contrary to speculations, this is the right time for investment both domestically and internationally. Foreign direct investments should quadruple yearly and this is what we expect. The market is still in the right direction.”

On the controversies surrounding the operation of custody accounts and margin accounts by stockbrokers, the Director-General, Nigerian Stock Exchange, Prof. Ndidi Okereke-Onyiuke, said the NSE did not stop custody account operations as perceived by market watchers. She said the Central Securities and Clearing System simply issued a letter to the authorities to the effect that the margin accounts be maintained, adding that the controversy was because people were more used to the facility. She said the nomenclature was simply changed from custody accounts to margin accounts.